Slower loan growth for Malaysian banks this year: Maybank IB

KUALA LUMPUR : Maybank IB Research Bhd expects further moderation in the loan growth throughout this year due for Malaysian banks with a lower forecast of 4.7%.

 

This compares unfavourably to last year when the industry recorded a 5.6% y-o-y growth.

 

“With the contraction in loan applications and approvals throughout the year, we expect further moderation in 2017,: it said in a note today.

 

The research house currently has a 'neutral' rating on the banking sector. In spite of this, it is maintaining 'buy' calls on three stocks – Alliance Financial Group Bhd, BIMB Holdings Bhd, and Affin Holdings Bhd.

 

According to Maybank, both household (HH) and non-HH loan growth expanded at a similar rate of 5.3% y-o-y in 2016 with HH loans accounting for 56.8% of total loans. The average loan approval rate nevertheless increased to 47.1% in December 2016 from 44.8% the month before.

 

“On a three-month moving average (MA) basis, loan applications contracted 7.6% in December, this being the sixth consecutive month of contraction. Meanwhile, loan approvals contracted for the sixteenth consecutive month in December,” it said.

 

While total bond issuances amounted to RM85.3bil in 2016, versus RM85.6bil in 2015, total credit growth (loans plus bonds) was marginally lower at 5% y-o-y.

 

Meanwhile, the industry's absolute gross impaired loans (GIL) rose 6% y-o-y but the GIL ratio was stable at 1.6%. However, the loan loss coverage fell to 90.2% in December from 91.1% in November last year.